Mortgage setllement means $57M to aid Arizona homeowners, with fight over more

Arizona Attorney General Tom Horne disclosed Monday how the state’s roughly $57 million in mortgage settlement funds will be disbursed, and it is aimed to mostly help struggling homeowners and put the brakes on the state’s foreclosure crisis.

The funds are only a portion of the $97.7 million Arizona received as part of the $25 billion national mortgage settlement reached earlier this year between five of the country’s largest banks and 48 other states plus the District of Colombia. Those include JPMorgan Chase & Co., Bank of America and Wells Fargo & Co., the state's three largest banks.

Arizona’s entire allocation was intended to go toward foreclosure assistance for homeowners statewide. But nearly half of it, about $50 million, was instead used by the Arizona Legislature and Gov. Jan Brewer to help balance next year’s state budget.

Opponents of that move – such as the Arizona Housing Alliance, Center for Law in the Public Interest and Morris Institute for Justice – are trying to get the Maricopa County Superior Court to overturn the Legislature’s decision.

As for the remainder, Horne said at a Monday press conference that money likely will be available to homeowners statewide beginning sometime early next year through the following ways:

• $41 million for direct homeowner assistance and consumer restitution. That includes help for struggling homeowners, including veterans, seniors on fixed incomes and borrowers experiencing temporary set-backs such as medical expenses or job loss. This will be done through various bridge loan, grant and mortgage principal reduction programs.

Consumer restitution means the AG’s office will use some settlement funds to pay consumers who filed complaints against mortgage servicing companies. It also will be used to collect unpaid judgments the office obtained against lending firms that unfairly targeted borrowers.

• $5 million, or $1.6 million annually for three years, for enforcement and monitoring the industry. The AG intends to use this chunk to expand resources to administer the assistance programs as well as to crack down on and monitor the activities of the lending industry.

• $5 million, or $1.6 million annually for three years, for housing counseling. This funding will provide financial assistance to Housing and Urban Development-approved counseling agencies that help struggling homeowners explore all options to foreclosure and access loan modifications, among other things.

• $4 million, or $1.3 million annually for three years, for legal services. Because the AG’s office cannot directly represent homeowners and tenants facing foreclosure or eviction, the agency is using this portion to fund legal aid programs that can.

• $2 million, or $666,000 annually for three years, for outreach, marketing an education. This portion will essentially be used to raise public awareness as to exactly how homeowners can access the Arizona’s settlement funds.